Cambodia’s Garment Exports Fall as Demand Drops in U.S., Europe [-Isn't that contrary to what Dr Hun Xen predicted?]

By Daniel Ten Kate and Carole Zimmer

“Just look at the factories ... They’re closing. The living standards get worse and worse” - Sary Muong, factory worker

March 18 (Bloomberg) -- Cambodia’s garment exports are declining as a global recession crimps demand in the U.S. and Europe, cutting into an industry that supports a 10th of the Southeast Asian country’s population.

In January, garment exports plunged 25 percent from a year earlier to $185 million, said Mean Sophea, who heads the Commerce Ministry’s Trade Preferences System Department. Over the past decade, they grew at an average pace of 28 percent per year, according to the World Bank.

“I’ve never seen garment exports drop this much,” Mean Sophea said by phone from Phnom Penh, the capital. “The government is trying to reduce expenses for exporters, but we have seen a lack of demand from the U.S. and Europe.”

The U.S. and Europe take more than 90 percent of clothes made in Cambodia. Southeast Asia’s second-smallest economy may shrink 0.5 percent in 2009, the International Monetary Fund said March 6, revising down its 4.8 percent growth projection made a month earlier.

The proportion of garment shipments to total exports is higher in Cambodia than any country except Bangladesh and Haiti, according to World Trade Organization data. Some 70 percent of the country’s clothes were shipped to the U.S., where it was the eighth-largest supplier in 2007, the World Bank has said.

Lost Jobs

About 30,000 Cambodian garment workers, or a 10th of the total, lost their jobs in the past year as factories closed, the World Bank said in a March 8 report. The industry accounted for 17 percent of Cambodia’s gross domestic product in 2007.

The garment industry took off 10 years ago after Cambodia signed a trade deal with the U.S. that linked market access with improved labor standards in its factories. Exports went from almost nothing in 1994 to $2.7 billion two years ago.

The money earned every month by those who sew and stitch jeans and T-shirts for retailers such as Gap Inc. and Stockholm-based Hennes & Mauritz AB supports as many as 1.5 million Cambodians, said Douglas Broderick, resident representative of the United Nations Development Fund in Phnom Penh.

“There’s a whole community around the garment sector, little vendors, landlords, food stalls,” he said. “All those people will get hit.”

Sary Muong, a Cambodian garment worker earning less than $2 per day, has struggled to provide her family basic goods like food and clothing. The 34-year-old single mother makes a monthly salary of $55 that supports her parents and 8-year-old daughter.

“Just look at the factories,” Sary Muong said from a one-room shack with no running water or toilet in Phnom Penh where she lives with her sister. “They’re closing. The living standards get worse and worse.”

Labor Standards

Cambodia’s garment industry has built a reputation for good labor standards over the past decade that the Commerce Ministry says contributed to its growth. In 2001, the government, garment factories, labor unions and the International Labor Organization, a UN agency, agreed to set up a monitoring agency called Better Factories Cambodia.

It files semi-annual reports on working conditions in factories that go to buyers like Nike Inc., Wal-Mart Stores Inc. and Adidas AG. Still, the higher labor standards haven’t stopped retailers from demanding ever lower prices, said Roger Tan, a factory manager and secretary-general of the Garment Manufacturers’ Association of Cambodia.

“Every factory is cutting costs now whether they like it or not,” he said. “The whole world is in deep trouble. Nothing should surprise anyone now.”

The government, reliant on overseas aid to finance a quarter of the national budget, has said it will extend tax breaks for clothing manufacturers to help reduce costs. Even so, Cambodia remains “increasingly affected” by the global slowdown, the IMF said, adding that its 2009 growth forecast may be revised again.

The world economy will shrink this year in a slump that is the worst “in most of our lifetimes,” Dominique Strauss-Kahn, the IMF’s managing director, said March 10. The World Bank, which also expects a contraction, said two days earlier that global trade would decline by the most in 80 years.

To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; Carole Zimmer in New York at czimmer2@bloomberg.net.

Workers Moving From Factories to Nightclubs [-Don't worry, everything is fine in Cambodia, the IRI even said so!]

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
16 July 2008

On a crowded night inside a hotel and nightclub in Phnom Penh, young women in traditional Cambodian costumes sit under shimmering lights at the entrance of a hundred karaoke rooms, waiting for visitors.

Among these expectant young women, some are former garment workers, forced from Cambodia's factories by an increasing cost of living and stagnant wages.

Twenty-three-year-old Sopheak sits nervously among them.

Since she left Kampong Cham province for work in Phnom Penh three years ago, Sopheak has been expected to send most of her wages home to support her family, but by the beginning of 2008, as prices for food and fuel soared in the capital, she found she couldn't send enough.

She decided to shift jobs, moving to a karaoke nightclub, where she works for wages and tips, but where rights workers say she is in danger of moving toward prostitution.

"I made the decision to work at a karaoke club because I am able to save money for my mother," Sopheak says, as a romantic Khmer ballad rumbles through the room. "If I work at a factory, the wage is just enough for my stomach."

At the club she makes a $50 monthly wage, about the same as factory workers earned before a $6 supplement was added to their salaries in April. On top of that, she earns tips, between $2.50 and $7.50 per night.

The downside is that she is groped and kissed by her visitors, many of them rich Cambodian men.

"To think about it, I cry all the time," she says, and indeed her eyes moisten as she speaks. "To get four or five dollars, they force us to drink, they kiss us and fondle our breasts."

"To support my mother, I must not think about honor," she says.

The Garment Manufacturers Association in Cambodia, or GMAC, estimated in 2007 that garment factories employed as many as 350,000 workers in more than 300 factories. Most workers are young Cambodian women who have left behind a life in the countryside where they live under a dollar a day.

They are now facing low wages, hard hours, overtime shortages and a decline in orders from buyers in the US, where the economy is struggling.

The factors have added to the woes of soaring prices, workers say, pushing them for other work.

Chea Mony, president of Cambodia's Free Trade Union, says more women started shifting to nightclub work in 2008. More than 27,000 workers have left their factory jobs since April, he says, despite the $6 salary increase meant to help against rising costs.

Women who choose to work in the nightclubs can earn three times as much, he says.

GMAC official Kiang Monika agrees that there is a problem with workers leaving the factories, but he says the number is small and hasn't yet affected the industry.

Increased pressures have forced factory owners to find methods to encourage their workers, he says. Otherwise, their investment will collapse.

The garment industry is Cambodia's biggest export earner, but the sector has struggled in the face of the weakening global economy, posting only 8 percent growth in 2007, compared to 20 percent growth the year before.

Kek Galabru, president of human rights organization Licadho, says workers who turn to work at nightclubs can easily fall into prostitution.

But Om Mean, undersecretary of state for the Ministry of Labor, says workers have a right to change jobs, and karaoke work is legal.

Legal or not, many women are not proud of the choice.

Srey Phea, 22, who is thin and speaks in a slow, shy voice, says she left her garment factory three months ago, in favor of nightclub work.

A month into her new job, she broke up with her boyfriend, and though the new employment has meant more free time and more money, she sometimes loses out on tips when she refuses to spend the night with visitors.

"My mother will never know that I was caressed and fondled," Srey Phea says. "I don't dare tell her."

Koh Kong Fishermen Worried About the Future

By Suon Kanika, VOA Khmer
Original report from Koh Kong province
13 March 2008

Click here to listen to the Khmer audio aired on March 13

With catches of crab, shrimp and fish dwindling, fishermen of the seas off Koh Kong province say they worry their living conditions will worsen.

The traditional fishermen told VOA Khmer recently they were facing pressure from illegal, large-scale fishing.

They said they cannot compete with large vessels from Cambodia's neighbors, who sometimes use illegal methods, such as electroshock.